Nations Of Notebooks

Hsieh's operation is remarkably efficient: she recently instituted a multifunctional production line, using 5 people to perform the tasks once handled by 25. But, says Hsieh, finding the labor force to handle such advanced production is difficult. At FIC, for example, more than 90% of the line workers are foreigners or high-school students who work in three-month internships. The Philippino workers earn NT$14,800 (New Taiwan dollars) a month, roughly U.S.$548, along with room and board.

The workers lean over the moving line of parts with unbroken intensity, hardly noticing a foreign visitor. They work 8 1/2- hour shifts with two 10-minute breaks and a 30-minute lunch break. Hsieh's attention to detail and relentless cost-consciousness are paying o/ for FIC: labor costs are less than $70 per unit or 1% of the total of the finished product; she now has three lines working in 8-hour shifts, 24 hours a day.

Tsiang's other reason for working out of the FIC mountaintop plant is to stay in close contact with his purchasing department. The manufacturing system depends on the smooth operation of the supply chain. So young associates like Peter Lee and Kevin Huang spend their days talking on the phone, greeting the suppliers who visit FIC regularly to make sure that their large customer is happy, or going out to visit FIC's multilevel tiers of suppliers. It's a management task that holds the key to FIC's future: Tsiang still travels regularly with his purchasing people to every corner of Taipei searching for the fastest, most flexible, and most cost-efficient component makers in the supply chain.

Four Levels, One Ethic

Hidden amid the grim squalor of Taipei's crowded suburbs like Shin Chuang and Taoyuan, are the remarkable factories that supply the thousands of pieces that fit together to make a notebook computer. Negotiate a labyrinth of back streets, turn down a narrow alley where drying clothes hang on lines and there, where you least expect it, you'll find a sophisticated tooling company or a flexible printed circuit board maker.

The network is a vast web of mutually advantageous connections -- Guanxi. It flourishes because of a common goal: to wring a profit out of an intensely competitive, low-margin business. Its members share a common ethic: do whatever it takes to satisfy the customer. Today the FIC supply team sets out to look in on four different suppliers, ranging from a long-standing components manufacturer to a brand new startup in the service area.

The first stop is to Hsin Chung, a Taipei district, where Sando Chen, a 43-year-old former chemical engineer, leads a tour of Pucka Industrial Co., the flexible printed circuit board maker he founded 10 years ago. Chen is an affable, handsome businessman who has traveled extensively to set up global relationships for Pucka (the name means "hard work"). He has plants in Singapore and Shanghai, and partnerships with overseas companies such as Teradyne, Parlex, and Samsung. Pucka builds circuitry for Microsoft keyboards and Mercedes-Benz car phones. But more than 50% of its business is in notebook computers.

Pucka's operation offers an object lesson in how the Taiwanese squeeze costs out of the notebook computer. The factory is cramped but tightly integrated, a testament to space management in a country where space is at a premium. Chen smiles when he talks about the notebook business. "It's very exciting," he says. "Every day there is a challenge to make things very thin, very small, very light. We think about how to reduce cost dimensions and expand our flexibility for our customers." In fact, four words define Taiwan's notebook business: ching, buo, dwan, chow -- lighter, thinner, shorter, smaller.

Inside the factory, the complex, multiple-layered printed circuits are first etched in copper, then transferred to film and onto thin plastic polymers. Using techniques developed in Japan, Pucka's workers sandwich together up to 10 layers of circuits into one board in order to fit all the needed electronics into the tiny notebook package.

The smell of film-processing chemicals is pervasive and dizzying in the intense heat. Workers in blue smocks and paper bonnets move through a hot, open room where automated etching systems dance like a robotic spider on the copper plates printing the Weblike circuits. Palettes of stacked printed circuit boards four feet high are everywhere. In an air-conditioned office, young women scan each board for defects using their own vision and automated testing equipment. Chen has 160 employees in his factory; 15 are devoted to quality assurance and control.

Chen's twin passions are cutting costs and boosting efficiency. Two years ago, he says, a design change would take eight weeks; today Pucka can do it in half the time because of new equipment and improved worker training. Like all the other companies in the Taiwanese system, Chen's labor practices are designed to keep costs low: he hires young, inexperienced Taiwanese and brings in foreign workers from the Philippines or Malaysia.